>The RGGI CO2 Cap

The RGGI CO2 Cap

The RGGI CO2 cap represents a regional budget for CO2 emissions from the power sector. A CO2 allowance represents a limited authorization to emit one short ton of CO2 from a regulated source, as issued by a participating state.

Following a comprehensive 2012 Program Review, the nine RGGI states implemented a new 2014 RGGI cap of 91 million short tons. The RGGI cap then declines 2.5 percent each year from 2015 to 2020.

The RGGI states include two interim adjustments to the RGGI cap to account for banked CO2 allowances. The first adjustment is a reduction to each state's annual CO2 allowance budget for 2014-2020. The second adjustment is a reduction to each state's annual CO2 allowance budget for 2015-2020.

In addition, New Jersey sold a small number of CO2 allowance allocation year 2014 CO2 allowances in 2011, and a small number of CO2 allowance allocation year 2013 CO2 allowances were distributed from state set aside accounts after the interim adjustment. See the 2012-2014 CO2 Allowance Allocation for more details.

From 2009-2011, the cap was 188 million short tons per year for the ten-state region (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont).

From 2012-2013, the cap was 165 million short tons per year for the nine-state region (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont).

Cost Containment Reserve

The RGGI states have also established a Cost Containment Reserve (CCR) of CO2allowances that creates a fixed additional supply of CO2 allowances that are only available for sale if CO2 allowance prices exceed certain price levels – $4 in 2014, $6 in 2015, $8 in 2016, and $10 in 2017, rising by 2.5 percent each year thereafter.

The CCR is replenished at the start of each calendar year. The CCR is 5 million CO2 allowances in 2014 and 10 million CO2 allowances each year thereafter. See Allowance Allocation for more details.